Withholding Tax

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This discussion concerns an Indian company's obligation to deduct withholding tax when paying a German non-resident for booth space booking. The payment covers raw space, professional fees, and other charges. Initially, it was suggested that TDS should be deducted at 20%, with forms 15CA/CB required. However, a key point emerged: if the booth space activity occurred in Germany, it might be considered business profit taxable in Germany under Article 7 of the India-Germany Double Taxation Avoidance Agreement (DTAA), potentially negating the Indian withholding tax liability. A full analysis requires further details.

swasti

swasti (Querist)

13 January 2020 An Indian Company is making payment to a German Non Resident for Booth Space Booking which includes : (1) Payment for Raw Space, (2) Professional Fees, (3) Other Charges amounting to 10000 Euro. Is there any liability for deducting Withholding Tax and issuing 15CA/CB. If yes, at what rate and if not, what justification can be given.
Kindly suggest urgently.

CA Mohit Bansal

CA Mohit Bansal (Expert)

13 January 2020 Yes the TDS should be deducted @ 20% on all the above mentioned payments. Form 15CA/CB should be filed for payment to non residents as the Bank may not process foreign remittance in absence of the statutory forms

swasti

swasti (Querist)

13 January 2020 Thanks Sir for the suggestion. But Sir, isn't it Business Profit to be taxed in Other State as per Article 7 of the Indo-German DTAA and thus TDS not applicable. Here one more thing is to be mentioned which was perhaps left in the original query (I beg pardon for this) that the Booth space booking activity has been occurred in Germany and not in India. In this scenario, what would be the suggestion as DTAA prevails over IT Act?

swasti

swasti (Querist)